Suzlon raises $300 mn via FCCBs

Suzlon Energy, the country's largest wind turbine generator, has issued zero-coupon foreign currency convertible bonds worth $300 million (Rs 1,218 crore) to part-finance its organic growth initiatives.

The company is expanding its manufacturing capacity to 4,200 mw from 2,700 mw currently. The FCCBs would have a maturity period of five years and a day, after which shareholders would be allowed to convert them into shares of the company at Rs 1,800. This would be almost 59 per cent above its closing price of Rs 1,134.75 on May 16, 2007 on the Bombay Stock Exchange.

Suzlon plans to redeem the bonds at 145.23 per cent of face value if they're not converted into shares by maturity, offering investors an annual yield of 7.6 per cent.

The FCCBs are expected to be listed on the Singapore Exchange Securities Trading.

"FCCBs were the best option as it required minimum dilution and it was most EPS (earnings per share) accretive," a company official said.

The funds raised by the company, which is engaged in a bidding war with French company Areva to acquire German wind turbine maker REpower, would, however, only meet about a third of the overall Rs 3,300 crore required for the capacity expansion over the next two years.

"The balance funds would come from IPO proceeds and term loans tied up earlier," the official added.

While Deutsche Bank was the sole bookrunner for the transaction, Yes Bank acted as an advisor to Suzlon.

In addition, to meet its inorganic growth targets, Suzlon plans to borrow up to €1 billion from ABN Amro for the REpower acquisition. It has also recently picked up 7.7 per cent stake in REpower for €150 a share.